Debt offer to homeowners

CHELTENHAM & Gloucester Building Society will launch a hybrid mortgage next month, combining features of repayment and life assurance plans, writes Neasa MacErlean.

Holders of pension and endowment mortgages will be able to reduce the debt they are due to repay at the end of the term.

C&G decided to allow early loan repayments when it discovered that more than half its 340,000 borrowers were in credit on their monthly mortgage payments. Similarly, for the first time, C&G is allowing its repayment mortgage customers to reduce the term of their loans by repaying capital early. They will be able to take up the new deal by maintaining their present payments even though interest rates have fallen.

Early repayments will not be credited until the end of each year, so borrowers should pay a lump sum in December and earn interest on the extra money in the meantime.